HR-busheling spread stretches again in September

The spread between domestic hot-rolled (HR) coil and prime scrap prices continued to widen in September. It is now up for a 12th straight month, and at the widest gap since January 2022.

Steel Market Update’s (SMU) average HR coil price was $1,225 per short ton (st) FOB mill, east of the Rockies, as of Tuesday, Sept. 8. That’s $20/st higher vs. the previous week and a $45/st increase from a month earlier.

Meanwhile, busheling averaged $467.50 per gross ton (gt) in September, $10/gt higher vs. August.

Figure 1 shows price histories for each product.

After converting scrap prices to dollars per short ton for an equal comparison, the differential between HRC and busheling scrap prices was $808/st as of Tuesday, up $36/st from a month earlier. The last time it was higher was in January 2022 when it stood at $943/st (Figure 2).

What’s going on?

The spread has been on a steady upward grind since last October. The fact remains that #1 busheling prices have not seen the same favorable rise as HR coil prices over the past year. Scrap prices saw little change from February to July, up 15% (+$63/gt) over the past 12 months. By comparison, HR coil has jumped more than 84%, or $369/st, over the same period.

As long as HRC keeps rising, the spread is likely to keep widening.

Scrap prices are likely to vary little in early Q4. But winter collection struggles and year-end holidays could be met with steady mill order books, providing some pricing lift to close out 2026. While this could lead to some narrowing in the spread, it’s unlikely. Steady HR coil demand and the current tariff regime should help sheet prices continue to outpace any anticipated increases in #1 busheling.

HR premium as a percentage

The graph on the right-hand side of Figure 2 shows the spread relationship differently: We have graphed HRC’s premium over busheling scrap as a percentage. HR coil prices now hold a 162% premium over prime scrap vs. 158% a month ago.

David Schollaert

David Schollaert is deputy editor-in-chief for Steel Market Update. David joined SMU after more than a decade in the metals and mining industry in a myriad of different roles. Much of his early experience and expertise were within the coverage and analysis of steel-making raw materials and served previously as senior editor of the CRU Prices Service. Most recently, however, before his return to market analysis, David held roles as a metals buyer and an operations manager for raw material suppliers. He can be contacted at david@steelmarketupdate.com or 724-720-1008.